The US has just printed the highest inflation figures since the late 1970s.
Every year, regular Americans are getting poorer at a rate of 8.5%.
But here’s the good news: one man is here to protect the pockets of hard-working, tax-paying citizens.
The name’s Gensler. Gary Gensler. The hero we need, but sure as hell don’t deserve.
In his latest effort to safeguard the savings of the plebiscites, Gensler is going after Celsius: the sketchy borrow and lending platform offering ‘shadowy super coders’ yield on their internet drug money.
TL;DR:
- SEC goes after Celsius
- BlockFi fined $100m for offering high yield
- Changes to accredited investor threshold.
- Regulations being put in place at last!
Before diving into what’s happening at Celsius, the extremely dangerous bitcoins platform presided over by international kingpin, Alex ‘Cashinsky’ Mashinsky, it’s worth remembering this isn’t the first time the SEC has stepped in to protect the little guy this year.
BlockFi
BlockFi is a platform infamous for offering 9.5% APY to crypto investors via its high-yield accounts!
When respectable banks are offering little to zero interest on real money, you have to wonder what kind of racket is able to provide such high rates on what is effectively digital Monopoly money?
Luckily, Gensler wasn’t having any of it!
Just a few months ago, after an almost year-long investigation by the SEC, BlockFi agreed to pay a $100m settlement over its High-Yield Accounts.
Plus, BlockFi also agreed to stop opening new high yield accounts, saving countless fickle ‘investors’ from financial ruin.
Now, Gary is focussing on one of BlockFi’s competitors, the equally notorious Celsius.
SEC vs Celsius
In an announcement posted on the 11th of April 2022, Celsius stated the following:
“..we have been in ongoing discussions with United States regulators regarding our Earn product. As a result, there will be changes to the way our Earn product will work for users based in the United States.”
The ‘earn’ product in question refers to Celsius’s borrow and lending products, which allow vulnerable ‘investors’ lured into providing bitcoins and other cryptocurrencies in return for yield.
You can understand the appeal.
With the US inflation crisis worsening, desperate citizens are looking for increasingly extreme (and dangerous) solutions.
However, thanks to Gary’s dogged determination, US citizens will (from April 15) be barred from signing up to Celsius’s ‘earn’ feature moving forward.
Accredited investor criteria
But there’s more progress in the pipeline.
The SEC is also preparing to change the criteria required to become an accredited investor. Why does this matter? Because it will prevent poor people with net worths under $10 million from investing in a range of financial instruments they don’t understand.
As it stands, anyone with only $1 million in net worth (excluding primary residence), and income of $200,000 and above can become ‘accredited’.
Source: https://www.sec.gov/education/capitalraising/building-blocks/accredited-investor
That’s why the SEC’s proposal to up the threshold by a factor of ten makes so much sense. After all, there are much safer ways to protect your capital when you don’t have very much to begin with.
As Gary explained in this video, it can start with making simple lifestyle adjustments.
What else can you do?
If you’re American, poor, and you’ve already given up coffee, what other options are available to you?
Learn about compounding.
Yes, inflation is high, but we’re all in it together.
And you’re much better off compounding annualized interest rates from a reputable banking institution.
For example, this Bank of America savings account offers an annual percentage yield of 0.01%.
Source: https://www.bankofamerica.com/deposits/savings/savings-accounts/
Investing $10,000 today would yield a profit of $100 in interest over 12 months.
That might not sound like much, but by compounding over time, it could buy you and your family a PlayStation for every room of the house.
But what about inflation?
Remember, inflation is transitory. But still, everyone is feeling the pinch. We won’t sugarcoat it.
The April 2022 Consumer Price Index (CPI) data came in at 8.5% and was calculated on goods excluding food and energy. Certain conspiracy theorists are suggesting it could be higher if accounting for these other costs of living, with wild theories claiming true inflation is 25%.
Either way, it’s at times like these that financial prudence makes sense. Hence why Gary Gensler’s actions against the likes of BlockFi and Celsius are so timely, since poor people with little economic acumen are more likely to pile what little they have into Ponzis.
You might have heard of Coinbase, one of the most popular bitcoins platforms.
Well, it’s worth mentioning that Coinbase was on the verge of releasing a crypto lending product of their own, but thanks to Gary’s quick and decisive actions, they were forced to halt proceedings.
Coinbase CEO, Brian Armstrong, might have called it ‘sketchy behaviour’, but he would, wouldn’t he?
In our opinion, protecting hard-working Americans isn’t sketchy, it’s honorable.
Banter’s take
We’re sympathetic to those Americans too poor to become accredited investors, but at the same time, upping the threshold makes sense. Removing incentives to future success is crackpot, Communistic thinking. We’re also grateful to Gary and the SEC for clamping down on all these ‘get-rich-quick’ schemes like Celsius and BlockFi. Attractive as they are, so was the South Sea Company!
